Chip Stocks Diving as Nasdaq Falls 2.6% While S&P 500 Loses 1.2%
The Nasdaq and S&P 500 dropped off sharply on Tuesday as chip stocks performed very poorly ahead of Micron Technology's quarterly earnings.
Quick overview
- The Nasdaq Composite fell 2.6% on Tuesday, driven by a significant selloff in chip stocks ahead of Micron's earnings report.
- Tech-heavy indices like the S&P 500 also dropped, with Micron, Nvidia, and Super Micro Computers seeing notable declines.
- Oil prices remained stable around $73.50 per barrel as a peace deal between the U.S. and Iran eased market pressures.
- SpaceX shares continued to decline, falling 2.93% in premarket trading, raising questions about its long-term market support.
The Nasdaq Composite with its tech focus fell sharply on Tuesday morning, losing 2.6% as chip stocks experienced an incredible selloff, indicating changing market sentiment.
Tech-heavy stock indices dropped quickly on Tuesday, with the S&P 500 falling 1.2% and the Nasdaq losing more than twice that as investors scrambled to sell their chip stocks. Shares of Micron Technology (MU), Nvidia (NVDA), and Super Micro Computers (SMCI) all trended much lower than the previous day.
The selloff is likely partly due to Micron’s upcoming earnings report, which would have to be fantastically positive to meet the hype for this high performance chip stock so far this year. Stock futures in the AI chip sector have been climbing high for weeks, and it is only natural that they start to stabilize, but we are seeing sharp decline on Tuesday as investors hurry to make their trades before they feel predicted losses from the Micron quarterly earnings report.
Oil Trades Flat While Tech Stocks Stumble
There was little change on Tuesday morning in oil futures, as the West Texas Intermediate benchmark held around $73.50 per barrel and the Brent crude price kept close to $75.60 a barrel. As expected, these prices stabilized after a peace deal was signed between Iran and the United States. After months of soaring prices and fluctuating market activity, the price of oil has started to settle back down near its pre-Iran war level.
The U.S. has agreed to waive its oil sanctions on Iran for 60 days, and Iran has agreed to start the process to reopen the Strait of Hormuz. This will allow trade to start resuming as normal in the region and take some of the pressure off of stock markets. Stock indices have been climbing near record highs since last week, and Micron Technology set a new high on Monday, but that changed Tuesday as traders began selling off their tech shares. The Dow remains close to its level from the previous session, losing just 0.4% since it has fewer tech stocks than the other two indices.
SpaceX (SPCX) continued its decline Tuesday, losing another 2.93% in premarket trading. The stock has been hammered for days now after a strong opening period following the IPO launch. At $150 per share, the price of SPCX is now lower than its opening value of $160. The question investors are asking is whether the stock is simply settling or if it is really losing market support. There were many traders who simply jumped onto the stock as it shot up and then sold off at its peak, but the long-term value of this asset is very hard to predict for now.
Several major companies will report their quarterly earnings this week besides Micron. These include FedEx (FDX) and Cerebras Systems (CBRS), both slated for Tuesday. The chip stock Cerebras will be one to watch as the sector is under intense scrutiny.
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